Crisis shapes Russian sporting goods retail

Russian sporting goods retail underwent tectonic changes as several of the world’s leading brands pulled out from the country, and numerous businesses struggled to fill the gap, a marketing study conducted by the Moscow-based consultancy Retailer showed.

Adidas, Nike, Reebok and Decathlon’s departure from Russia triggered a 40 percent slump in retail sales on the local sporting goods market last year, the company said, citing calculations by Russian banks. Western brands officially have ceased operation in the country, though their products gradually return to the shelves. For instance, Turkish retail firm FLO Retailing acquired 100 former Reebok stores in Russia in May 2022, converting them into multi-brand outlets, selling Reebok among other brands, Retailer said.

Several Russian companies have also taken steps to compensate for the lack of Western sporting goods on the market. For example, in July 2023, Russian cosmetic brand Mixit rolled out plans to produce sporting outfits and athletic apparel at Chinese factories for the Russian market. Zenden, a major Russian casual footwear retailer, has recently also unveiled plans to start manufacturing sporting goods under its brand Pulse.

While some foreign brands leave Russia, others come in, Retailer said, citing primarily Chinese sporting goods companies. In April 2022, Li-Ning opened its first store in Russia. Although the company has not been actively expanding its retail chain, the Chinese brand made its way to Russian retail networks and marketplaces. In November 2022, Sportmaster started selling Li-Ning and 361 in one of its retail chains, Urban Vibes.

Retailer stated that the departure of Western brands opened a window of opportunities for Russian companies. Several casual fashion retailers, namely BeFree, Baon and Level Up, expanded their range with various sporting goods. Russian retailers’ association AKORT also claimed that diversifying the range of sporting footwear and outfits is a growing trend in the country’s fashion industry.

A slump in sporting goods sales in the offline segment spurred online sales. Wildberries, the largest Russian marketplace, saw a 170 percent hike in sales in this category last year, while its range nearly doubled. In 2023, however, the offline segment is believed to recover its position partly. Polina Zhilkina, Managing Partner at Retex, was quoted by Retailer as saying that this year, the situation in online and offline segments of the Russian sporting goods market has been gradually leveling off.

The Russian sporting goods market is still in short supply, opening vast prospects for local manufacturers, Stanislav Nazhmitdinova, founder of the SHTAB, a fashion business scaling agency. This trend should fully unravel its potential in 1.5 to 2 years, when Russian manufacturers finish all test launches and begin manufacturing goods perfectly meeting buyers’ expectations.

However, Dania Tkacheva, ex-manager of Nike Russia, said it is unclear whether Russian manufacturers would produce technological, highly functional goods or just ordinary sportswear. The former requires more investments and time, while the latter is easy and guarantees a quick investment return. In general, the Russian market primarily lacks highly functional goods, though parallel import could partly meet the demand in this niche.

De facto, all the leading sports retailers in the Russian Federation continue to sell the products of Nike, Adidas, Puma and others, though not in mono-brand stores like before, Tkacheva said. However, the parallel import system has its drawbacks: there is a lack of product range, no regularity of deliveries, the goods arrive later than the official season, and there are not enough seasonal winter products, she added.